WASHINGTON – President Bush said Saturday that the credit crunch is threatening the availability of student loans. He said his administration is doing what it can to help with emergency loans but prodded Congress for authority to do more.
"A slowdown in the economy shouldn't mean a downturn in educational opportunities," Bush said in his weekly radio address.
He voiced support for a House-passed bill that would grant the Education Department greater temporary authority to provide loans to students unable to secure ones from banks or other lenders. A similar measure by Sen. Edward M. Kennedy, D-Mass., is pending in the Senate.
The president urged Congress to get the legislation to his desk "as soon as possible."
"A delay of even a week or two may make it impossible for this legislation to help students going to school this fall," Bush said.
He noted that recently some lenders had dropped out of the federal program that provides college loans to students who often have little or no credit.
Without action on the legislation "many students may approach the upcoming school year uncertain of when they will be able to get their loans or where they will come from," Bush said.
Bush said the Education Department, through its "lender of last resort" program, was stepping up efforts to make loans directly available to students.
"But more needs to be done," Bush said. "Congress needs to pass legislation that would give my administration greater authority to buy federal student loans. By doing so, we can ensure that lenders will continue to participate in the guaranteed loan program and ensure that students continue to have access to tuition assistance."
The legislation passed the House 383-27 this month.
Dozens of lenders, making up an estimated 13 percent of the market, recently stopped making loans under the federal program that subsidizes and backs low-interest loans.
Some students relying on private loans, which are not federally backed and can carry high interest rates, have had trouble getting those nonfederal loans.
The House bill would raise limits on how much borrowers can receive under the federal program.
It also tries to encourage parents to take out federal loans for their children's education. The bill would allow parents to defer repayment of those loans until after their children leave school, which is currently not allowed.
Students are just starting to line up financial aid packages for college this fall. Experts say the impact of the credit crunch on the student lending market probably won't be entirely clear until this summer.
"Ensuring the stability of student loans is essential to keeping educational opportunities open to all Americans," Bush said.